Avastin/Lucentis Update 26: CMS Ups the Ante
Today, two stories describing the impact of this new ruling on ophthalmologists, their patients, and Medicare were published by both The New York Times and The Wall Street Journal
October 2, 2009
New York Times
A Rule on Eye Treatment Is Likely to Cost Millions
By Andrew Pollack
Medicare is putting in place a new policy that may sharply curtail the use of the cancer drug Avastin as a treatment for eye diseases. But the way the bureaucratic gears mesh in this case, the move could end up costing Medicare itself hundreds of millions of dollars a year, and individual patients thousands of dollars.
For several years, eye doctors have been using Avastin off-label as a treatment for retinal diseases, particularly age-related macular degeneration, the leading cause of blindness in the elderly. Avastin is similar in its mechanism of action to Lucentis, a drug approved to treat macular degeneration. Both drugs are made by Genentech, a subsidiary of Roche.
Lucentis costs about $2,000 per injection — with an injection needed as often as every month. Although Avastin can cost thousands of dollars a month as a cancer treatment, when used in the tiny portions required for eye-disease injections, it costs only about $30 to $50 per shot. But it was unclear how Medicare should reimburse eye doctors for that use of Avastin. Payment policies varied regionally, though ophthalmologists say their costs for the drug were essentially covered.
Medicare has now introduced a special reimbursement code just for the smaller doses of Avastin. And starting Thursday (October 2nd), the reimbursement of Avastin dropped to about $7.20 for the dose typically used in the eye. That would mean eye doctors — who purchase Avastin and then are reimbursed when using it on patients — would lose money administering the drug.
The new policy would give eye doctors a financial incentive to switch to Lucentis, for which they would be fully reimbursed even though that drug is significantly more expensive. If doctors do shift to Lucentis, “this will have a huge economic impact on Medicare, in the range of hundreds of millions of dollars,” said Dr. David W. Parke II, chief executive of the American Academy of Ophthalmology. “Members view this as a bureaucratic decision that is maybe necessary, based on statutes, but highly short-sighted.”
Dr. Parke said about a million injections a year were given for macular degeneration, about half of them Avastin and the other half Lucentis. He said there was no indication that Genentech, which would make more money if more patients used Lucentis, had anything to do with Medicare’s policy change.
Dr. George A. Williams, an ophthalmologist at William Beaumont Hospital in Royal Oak, Mich., said patients themselves could also be affected. The 20 percent Medicare co-payment for Lucentis is about $400, compared with only a few dollars for Avastin.
Medicare apparently calculated the reimbursement rate for the tiny eye doses based on the average sales price of Avastin for cancer. But it did not take into account the markup charged to eye doctors by compounding pharmacies — the chemists that divide up the Avastin into tiny doses under sterile conditions.
The ophthalmology academy (AAO) has talked to Medicare this week and is hopeful the situation can be resolved, Dr. Parke said. “They truly do understand the problem and are looking for solutions,” he said.
A spokesman for Medicare said in an e-mail message, “We don’t know why the drug is only available to doctors through compounding pharmacies.” He said Medicare would continue to monitor the use of Lucentis and Avastin.
October 2, 2009, 9:28 AM ET
WSJ Health Blog
How Cutting Payments for a Drug Could Cost Medicare More
EyeMedicare just started reimbursing doctors less for very small amounts of the cancer drug Avastin. Oddly enough, that could mean Medicare will start spending lots more money on the eye drug Lucentis. Here’s why.
Lucentis and Avastin are very similar molecules. A few years back, before Lucentis was on the market, eye doctors realized that they could inject Avastin in patients’ eyes to treat macular degeneration, a condition that can lead to significant loss of vision and occurs mostly in the elderly.
Avastin costs tens of thousands of dollars to treat cancer patients, but the tiny dose doctors inject into patients’ eyes costs a very small fraction of that –the specialty pharmacy chain The Apothecary Shops repackages Avastin for use in the eye and sells it to doctors for $27 per dose, John Musil, the company’s CEO, told the Health Blog.
This week, Medicare cut its reimbursement for the dose of Avastin commonly used in the eye to about $7. Previously, when there was no specific billing code for tiny doses of Avastin, doctors could get reimbursed about $50 for using the drug in the eye, Philip Rosenfeld, an eye doctor at the University of Miami, told the Health Blog.
For a dose of Lucentis, Medicare reimburses doctors $2,039. Doctors pay just under $2,000 for a dose of Lucentis, Rosenfeld said. That means that eye doctors will now lose a bit of money when they use Avastin to treat patients’ eyes, and make a bit of money when they use Lucentis. Avastin hasn’t been approved for use in the eye, but it’s legal for doctors to use it in that way. Many eye doctors use both Avastin and Lucentis, depending on patient preference, Rosenfeld said.
Rosenfeld, like many docs, believes both drugs work equally well to treat macular degeneration; the NIH is currently sponsoring a head-to-head trial. But the new payment structure could push eye docs away from Avastin and toward the far more expensive Lucentis.
“Doctors will do what’s in the best interest of the patients,” Rosenfeld said. “Given that both drugs are equal, it’s not surprising that they’ll do what’s in their financial interest.” That could mean a hit for Medicare, as well as for Medicare patients who are on the hook for co-pays.
Both Lucentis and Avastin were developed by Genentech, now owned by Roche. U.S. sales of Lucentis were over $550 million in the first half of this year, Roche reported. Because the drug is primarily used by the elderly, much of that is paid for by Medicare.
Until now, there was no specific Medicare billing code for small doses of Avastin. A Medicare spokeswoman said the new reimbursement level is based on a formula that is determined by law, and doesn’t take into account the costs of repackaging the drug.
Retina specialists could face compensation issues regarding bevacizumab, other procedures
NEW YORK — A new rule currently under review by the Centers for Medicare and Medicaid Services (CMS) could drastically reduce the compensation for bevacizumab, while other billing codes germane to the practice of retina are also being reconsidered.
A new rule passed last week by the CMS mandates compensation for Avastin (bevacizumab, Genentech) based on average price of the drug. According to Trexler M. Topping, MD, however, the new rate does not account for associated expenses.
"They recently announced the development of code Q2024 for Avastin at a $1.24 per 0.025 mg, giving you a little over $7 for a typical intravitreal dose," Dr. Topping said here during a presentation at the Retina Congress 2009. "The particular methodology that CMS used ignores the medical, legal and risk management issues of separating individual doses from a large vial of drug."
The decision could significantly affect reimbursement for practicing retinal specialists, and it comes at a time when other codes are being revalued by the relative value update committee, the body that recommends code reimbursement rates to the CMS.
According to Dr. Topping, both the injection code and the code for optical coherence topography have been called up for review, and while the American Academy of Ophthalmology is working closely with the relative value update committee, there is early indication that both codes will be significantly devalued.